Category Archives: Montgomery

1st Quarter Alabama Residential Real Estate Outlook Positive

I’m a bit late putting this up and in fact the next survey is underway! The ACRE report archive can be found here.

1. 1st Quarter Alabama Residential Real Estate Outlook Positive

This survey projects expectations for the 1st quarter of 2014. The scale ranges from 0-100 with 0 being much worse, 100 being much better, and 50 indicating no change expected.
The professional real estate community has a very optimistic outlook for 2014. All of the overall indicators are at the highest 1st quarter levels we have seen since beginning of the survey in 2010. All of the indicators improved from last quarter and remain at or above 50 indicating expansion expected, except for credit. The availability of credit continues to be viewed somewhat negatively, at 49, two points better than last quarter.

1.1 Overview Scores:

This quarter showed improvement in all regions for residential markets. In addition, the commercial indicators are in a clear uptrend. This is encouraging, and overall measures remain in the expansion zone.
The below chart reflects the aggregate scores for the survey overall. The overall total stat score is in bold blue.

Survey Analysis Overall

Survey Analysis Overall

1.2 Commercial Market:

Commercial market participants, (the majority of the respondents are from the Birmingham market area), remained positive this quarter (Total Stat) at 58 this quarter a two point improvement from last quarter and improving 7 points to an all time high of 61 for sales expectations. Price expectations improved 3 points to 56 indicating improving pricing conditions. The score for credit availability is at a new high of 56, up 3 from last quarter.

Survey Analysis-Commercial Market

Survey Analysis-Commercial Market

1.3 Regional Results:

The coastal region continued to remain the most optimistic in the state at 61 (Alabama expectations), up from 58 last quarter. On an overall basis all areas sales expectations remained above 50. The coastal region, also had the highest sales expectations at 62. The moving average line is the prior 4 quarters averaged of the Alabama expectations, to remove the effects of seasonality, and it is easy to see the pretty steady upwards trend.

Regional Total scores chart:

Survey Analysis-Regional Overview

Survey Analysis-Regional Overview

The charts below also have a “moving average” line which averages the “Total Stat” for prior 4 quarters, by area, to smooth out the seasonal variations. The quarter to quarter variation is highly seasonal, but the moving average shows a better picture of the overall trend, which is quite positive.

Survey Analysis-North

Survey Analysis-North

Survey analysis-NorthCentral

Survey analysis-NorthCentral

Survey Analysis-South Central

Survey Analysis-South Central

Survey Analysis-South Coastal

Survey Analysis-South Coastal

1.4 North

North Alabama total score improved 6 points from last quarter to 53, also 6 points better than last year’s 4th quarter.
The sales outlook improved to 59 from 48 last quarter, but with price expecatations also climbing to 50.

1.5 North Central

The North Central Region overall score climbed to 55 from 53. The sales score improved to 59 from 54. Inventory score climbed to 53 from 51, with pricing remaining at 55, and credit availability slipping one point to at 48.

1.6 South Central

The South Central Region overall score improved to 53 from 49 last quarter. The outlook for sales improved to 57 from 51.

1.7 South

The Southern Region overall score was the highest at 58. This sales score is the highest at 62. Price expectations declined by 5 to 56. Credit availability was 54 the first time we have seen it above 50.

About the Alabama Real Estate Confidence Index and Survey:

About 400 professionals responded to the 4th quarter 2013 survey which was conducted during the month of December 2013. The survey, conducted by the Alabama Center For Real Estate has the largest participation of any real estate survey. It provides important market insights. Full history and raw scores can be obtained by contacting the undersigned.

The ACRE Leadership Council  determined the need for a statewide industry confidence index and this was adopted as the Council’s first initiative. Tom Brander, Council Member, was selected by the Council and Grayson Glaze, ACRE Executive Director, to spearhead and work with the Center to conduct and produce its Alabama Real Estate Confidence Index (ARECI). The Council appreciates everyone who participated.

For further information contact Tom Brander at Tombrander@tombrander.com or Grayson Glaze at gglaze@cba.ua.edu

2014 Alabama Residential Real Estate Forecast

Summary:

Two years ago, ABRE Analytics, a collaborative research partnership consisting of the Alabama Center for Real Estate (ACRE) and Tom Brander, began to attempt to identify correlations with select economic indicators and historical sales data that could possibly shed light and assist with providing future real estate sales projections in selected markets across the State of Alabama.

In 2013, our sales forecast for Alabama fell within the margin of error – just 3.3 percent short of actual closed transactions. These projection results were an improvement from our inaugural 2012 forecast that also underestimated sales by 6.0 percent, but still well within the margin of error. For the first time after two-years of trial and error, we are also providing the 2014 sales forecast for each of the 25 associations that report data to the Center each month.

The projections for 2014 are based on using the last quarter’s actual sales (in 2013) and linear regression against full year sales, with as much history as we have in our database.

We have anywhere from 5 to 10 years of historical data depending on the area. The areas are quite different in total annual volume, ranging from under 100 sales per year to over 40,000 sales per year. Generally, the more annual sales and the greater history we have the greater projection accuracy we expect.

The initial correlations that we have found, supporting the concept used in the projections, range from 93%, best to a low of 33%. To some degree the correlation percentages may be indicative of future forecast accuracy.

In short, the larger the market the more likely the projections will be more accurate. This is due to both the law of large numbers and the momentum of larger markets. Using the last quarter of the prior year, we believe is the most relevant and timely data to project the following year. To the extent that an event happens during the year this approach to forecasting would not project that possibility (up or down).

Some areas and time periods have ”adjustments” applied to history to normalize the numbers. Examples include the tax credit in 2009 that pulled sales into 2009 and out of 2010. We also see limited data in particular for Baldwin county. Certain areas have ”unusual” events, such as plant closing or openings as well as major weather events that may distort historical data and certainly could happen in the future.

We think the projections have value, if for no other reason than to see if the year is unfolding as predicted or if variances emerge that should be investigated. So, please take these projections as our best efforts, but do your own work.

Statewide full year summary:

Statewide projected 2014 = 45,318, 5.0% over 2013 actual of = 43,160
Athens projected 2014 = 854, -2.95% over 2013 actual of = 880
Baldwin projected 2014 = 6,666, 47.74% over 2013 actual of = 4,512
Baldwin Condos projected 2014 = 2,052, 41.52% over 2013 actual of = 1,450
Birmingham projected 2014 = 12,845, 8.17% over 2013 actual of = 11,875
Calhoun County projected 2014 = 1,134, 4.52% over 2013 actual of = 1,085
Cherokee County projected 2014 = 135, -8.16% over 2013 actual of = 147
Covington projected 2014 = 253, 11.45% over 2013 actual of = 227
Cullman projected 2014 = 674, 6.14% over 2013 actual of = 635
Dothan projected 2014 = 1,039, 2.47% over 2013 actual of = 1,014
Gadsden projected 2014 = 681, 5.91% over 2013 actual of = 643
Huntsville projected 2014 = 5,219, 0.87% over 2013 actual of = 5,174
Jackson County projected 2014 = 163, -3.55% over 2013 actual of = 169
Lake Martin projected 2014 = 453, 3.66% over 2013 actual of = 437
Lee County projected 2014 = 1,345, 5.08% over 2013 actual of = 1,280
Marshall County projected 2014 = 773, 5.46% over 2013 actual of = 733
Mobile projected 2014 = 3,937, 2.79% over 2013 actual of = 3,830
Monroe County projected 2014 = 83, 7.79% over 2013 actual of = 77
Montgomery projected 2014 = 3,747, 5.11% over 2013 actual of = 3,565
Morgan County projected 2014 = 1,149, -3.04% over 2013 actual of = 1,185
Muscle Shoals projected 2014 = 1,419, -1.8% over 2013 actual of = 1,445
Phenix City projected 2014 = 951, 2.81% over 2013 actual of = 925
Selma projected 2014 = 143, 4.38% over 2013 actual of = 137
Talladega County projected 2014 = 150, -16.67% over 2013 actual of = 180
Tuscaloosa projected 2014 = 2,001, 4.22% over 2013 actual of = 1,920
Walker County projected 2014 = 335, 15.92% over 2013 actual of = 289
Wiregrass projected 2014 = 839, 5.4% over 2013 actual of = 796

Sample monthly area forecast charts (will have Projection to actual as data becomes available)

Monthly sample charts

Monthly sample charts

Full year projections with history:

This is useful to see how variable the history has been and how the forecasted linear regression tracks.

Group 1 charts

Group 1 charts

Group 2 charts

Group 2 charts

group 3 charts

group 3 charts

4th Quarter Alabama Residential Real Estate Outlook Continues Positive

This survey projects expectations for the 4th quarter of 2013. The scale ranges from 0-100 with 0 being much worse, 100 being much better, and 50 indicating no change expected.

The professional real estate community remained optimistic this quarter. All of the overall indicators are at the highest 4th quarter levels we have seen since beginning of the survey in 2010 except for the inventory indicator, which is 2 points lower than last year’s 4th Q. All of the indicators, while off from last quarter, remain at or above 50 indicating expansion expected, except for credit. The availability of credit continues to be viewed somewhat negatively, at 47, two points off last quarter.

Indicators20134q

The national score at 51, while down 7 points from last quarter, still indicates respondents are expecting modest improvement in the overall economic picture. The participants are more positive on the statewide conditions at 54, off 9 points from last quarter. Inventory expectations moderated to 50, down 3 points, indicating a balanced market. Sellers are seeing improved pricing with a score of 52, down 5 points from last quarter. Financing continues to be viewed negatively at 47, indicating that buyers may face tight financing conditions.

Regional Results:

The coastal region continued to remain the most optimistic in the state at 58 (Alabama Stat). On an overall basis all areas sales expectations remained above 50. Huntsville, North Alabama was the lowest at 51.

RegionalOutlook20134q

This quarter showed stability in all regions.  Historically, we usually see a marked decline in 4th Q expectations. This is encouraging, and overall measures remain in the expansion zone.

Commercial market participants, (the majority of the respondents are from the Birmingham market area), remained positive this quarter (Total Stat) at 54 this quarter a two point decline and declining 3 points to 54 for sales expectations. Price expectations dropped 1 point to 53 indicating improving pricing conditions. The score for credit availability is looking stable at 53.

North Region

All areas including North Alabama declined 6 points to 47, 2 points lower than last year’s 4th quarter. The total score is 47. The sales outlook slipped to 48, but with pricing also slipping to 48.

North Central Region

The North Central Region overall score remained positive at 53. The sales score declined to 54, off by 7 points. Inventory score declined to 51, down 4 points, with pricing declining to 55 from 58, and credit at 49.

South Central Region

The South Central Region overall score declined to 49 from 56 last quarter. The outlook for sales declined to 51 from 61.

South Region

The Southern Region overall score was the highest at 54. This sales score is the highest of the regions at 58, off 9 from last quarter.  Price expectations declined by 5 to 56.

About the Alabama Real Estate Confidence Index and Survey:

More than 425 professionals responded to the 4th quarter 2013 survey which was conducted during the month of September 2013. The survey, conducted by the Alabama Center For Real Estate now has the largest participation of any real estate survey. It provides important market insights. Full history and scores for each market segment are located here on the web http://goo.gl/a5V8sd

The ACRE Leadership Council  determined the need for a statewide industry confidence index and this was adopted as the Council’s first initiative. Tom Brander, Council Member, was selected by the Council and Grayson Glaze, ACRE Executive Director, to spearhead and work with the Center to conduct and produce its Alabama Real Estate Confidence Index (ARECI). The Council appreciates everyone who participated.

For further information contact Tom Brander at Tombrander@tombrander.com or Grayson Glaze at gglaze@cba.ua.edu

3rd Quarter Alabama Residential Real Estate Outlook Continues Positive

Summary

The survey projects expectations for the 3rd quarter of 2013. The scale ranges from 0-100 with 0 being much worse, 100 being much better, and 50 indicating no change expected.

The professional real estate community remained optimistic this quarter. All of the overall indicators are at the highest 3rd quarter levels we have seen since beginning the survey in 2010. Sales expectations are at 62, down 3 points from last quarter, yet still the highest 3rd quarter measure,  and up 4 points from last year. The availability of credit continues to be viewed somewhat negatively, at 49, the same as last quarter.

3q Indicators Overview

3q Indicators Overview

The national score at 58, up 1 point from last quarter, indicates that respondents are continuing to see improvement in the overall economic picture. The participants are more positive on the statewide conditions at 63, up 1 point from last quarter. Inventory expectations moderated to 54, down 1 point, indicating continued reduction of supply expected. Sellers are seeing improvement for improved pricing with a score of 57, up 1 point from last quarter. Financing continues to be viewed negatively at 49, indicating that buyers may face tight financing conditions.

Regional Results:

The coastal region continued to remain the most optimistic in the state at 67 (Alabama Stat). On an overall basis all areas sales expectations remained above 60 except the Huntsville North Alabama area at 59 however expansion is still expected.

3q Regional Outlook

3q Regional Outlook

This quarter showed stability in all regions.  Historically, we usually see a marked decline in 3rd Q expectations. This is encouraging, and overall measures remain in the expansion zone.

Commercial market participants, (the majority of the respondents are from the Birmingham market area), remained positive this quarter (Total Stat) at 54 this quarter a one point decline and declining 3 points to 57 for sales expectations. Price expectations improved 2 points to 54 indicating improving pricing conditions. The score for credit availability is looking stable at 53.

North Region

All areas including North Alabama had stable total scores which is very favorable since historically the 3rd quarter normally shows a decline. The total score remains 53. The sales outlook is positive at 59 off by 2 but with pricing pressure positive at 53 (up by 2).

North Central Region

The North Central Region overall score remained at 58. The sales score declined to 61, off by 4 points. Inventory score remained at 55, with pricing improving to 58 from 56, and credit at 51.

South Central Region

The South Central Region outlook for sales declined to 61 from 65.  We saw a dramatic uptick in the Montgomery, Central Alabama Rural segment with sales expectations at 57, up from 42; our sample size here was quite small however. The Suburban areas show sales expectations of 63, off from 69.

South Region

The Southern Region sales score is the highest regions at 67, off 2.  Price expectations declined slightly to 61 points from 62 last quarter.

About the Alabama Real Estate Confidence Index and Survey:

More than 450 professionals responded to the 3rd quarter 2013 survey which was conducted during the month of June 2013. The survey, conducted by the Alabama Center For Real Estate now has the largest participation of any real estate survey. It provides important market insights. Full history and scores for each market segment are located here on the web http://goo.gl/eBQXZ

The ACRE Leadership Council  determined the need for a statewide industry confidence index and this was adopted as the Council’s first initiative. Tom Brander, Council Member, was selected by the Council and Grayson Glaze, ACRE Executive Director, to spearhead and work with the Center to conduct and produce its Alabama Real Estate Confidence Index (ARECI). The Council appreciates everyone who participated.

For further information contact Tom Brander at Tombrander@tombrander.com or Grayson Glaze at gglaze@cba.ua.edu

ABRE Analytics: 2013 Forecast for Alabama Residential Sales

Last year, ABRE Analytics, a collaborative research partnership consisting of the Alabama Center for Real Estate (ACRE) and Tom Brander, began studying the correlation between unemployment rates and future real estate sales projections in selected markets across the State of Alabama.
Ala - 2012 Act vs Proj 2013.jpgView full sizeABRE Analytics: 2013 residential sales projections for selected real estate markets. All rights reserved.
With the release of the metro unemployment data for January 2013, ABRE Analytics is pleased to present our 2nd annual forecast stemming from this methodology and related commentary.
Area Full year 2011 Actual Full year 2012 Proj % chg from 2011 2012 Actual Err % Diff to proj Act 2012 % Diff to 2011 Forecast 2013 2013 F’cast to 2012 Act Method Unemp or last Q
Statewide 36965 41,992 14% 39280 -6% 6% 41,799 6% Last Q
Huntsville 8610 9,050 5% 9189 2% 7% 9,835 7% Unemp
Birmingham 12468 14,550 17% 13514 -7% 8% 14,571 8% Last Q
Auburn 1132 1,138 0% 1233 8% 9% 1,338 8% Last Q
Tuscaloosa 1743 1,826 5% 1735 -5% 0% 1,935 12% Unemp
Montgomery 2774 3,679 33% 3111 -15% 12% 3,342 7% Last Q

Note: the error bars are at +/- 10%

The above table summarizes last year’s results and our expectations for 2013. These predictions assume no “major events”. As expected with any new trends model in its inaugural trial run, the 2012 predictions were mixed. Alabama residential saleswere up 5.9 percent in 2012.

In Huntsville, the forecast was within 2% of the full year 2012 results. In the aggregate, the results pointed in the right direction right, but with some error so this led the team to explore some alternative approaches for this year’s predictions to improve accuracy. In the markets with the greatest error we revised our methods to use the last quarter of 2012 sales via straight line linear regression instead of the unemployment rate. This method appears to be more accurate in most markets historically and hopefully going forward.

With these adjustments, above is the overview of what ABRE Analytics think might happen in 2013. As for the projection of a 12% increase for Tuscaloosa that is out of line with the other markets, ABRE’s opinion is that this may be a little too optimistic, but we have yet to figure out a consistent method to arrive at a better projection for Tuscaloosa in 2013. Of course, the local market’s near-term response to the tornado of April 27, 2011 certainly has a role with the difficulty in identifying a projection that could be presented with more confidence. Last year we experienced a similar issue with Montgomery, which prompted us to develop the alternative methodology of using last quarter sales for predictions.

The method ABRE used for 2012 was based entirely on the January unemployment rate for a market area. The assumption was that the January unemployment rate eliminated the effect of holiday temporary work and would reflect the mood of the populace towards buying and selling a new home in the upcoming year. A standard linear regression line yielded a better than 80% correlation since 2004 in all areas. The standard error however is somewhat high. This method also has the benefit of using two longer term trends, unemployment and home sales, and only at a single point per year, which eliminates a lot of “noise” in both series.

The seasonal regularity of sales is such that if you know the total sales for a year, dividing the total by the average proportion of the yearly sales attributable to a month has shown to be remarkably stable. Exceptions to the regularity do occur, such as fiscal cliff drama and the tax credit for first time home buyers in 2009. ABRE eliminates this data when calculating the monthly spreads.

ABRE originally chose unemployment data as it is one of the more timely pieces of data released by the government, as well as being released by geographies that generally correspond to the reported real estate market areas. Other data from various government agencies are released so late as to not be timely enough for meaningful projections.

So, what ABRE presents is our best estimate of next year’s sales which specifically excludes the possible impact of unpredictable governmental action or inaction, although even this seems to be having less impact as both the populace and markets begin to ignore political histrionics. For what it is worth, ABRE did test everyone’s favorite housing predictor, interest rates, and could not find any useful correlation.

In each case ABRE experiments with prior years data to see how well the prediction methodology would have worked. We tried using the last quarter sales of the prior year to “regress” against the full year sales of the projected (next) year. This is based on the same premise that recent data may be indicative of future results.

In each case, except Huntsville and Tuscaloosa, this methodology (last quarter of the year to the following year) resulted in greater historical accuracy in predicting and considerably better correlation numbers. We did exclude 2010 from the analysis since the last quarter of 2009 had abnormally low sales, (although the full year sales were as expected), due to the 1st time homeowners tax credit that pulled sales into earlier quarters and depressed the year end.

Complete spreadsheets with all data are available as public Google spreadsheets, which also include month by month projections, at http://goo.gl/jtJGW. ABRE presents these projections as a “work in progress” and as a tool for assessing how well current sales are performing against some level of “informed” expectation. You should not rely on them, but nonetheless ABRE hopes the projections are found useful. ABRE welcomes comments and suggestions for improvement.

About ABRE Analytics: Strategic collaboration is one of the keys to accelerating the flow of insights in the 21st century. The Alabama Center for Real Estate (ACRE) and Tom Brander has been successfully collaborating since 2009. The flow of ideas stemming from this relationship have led to solutions to better serve the Alabama real estate industry and consumers. ABRE (ACRE/Brander Real Estate) Analytics is designed to foster future creative thinking while also providing hands-on experience for student interns of ACRE.

About ACRE: ACRE’s core purpose is to advance the profession of real estate in Alabama by providing relevant resources in the areas of research, education and outreach. The Center, founded in 1996 by the Alabama Association of REALTORS, the Alabama Real Estate Commission and the Office of the Dean at UA’SCulverhouse College of Commerce, also acts as an industry liaison for the benefit of business school students pursuing a career in real estate. To learn more, please visit ourwebsite.
About Tom Brander: Tom Brander is a prominent real estate publisher. He produces The Rudulph/Brander Monthly Real Estate Report in the Birmingham, Huntsville and Baldwin County markets. His company, OSWCO, LLC (Open Software Company) is an authorized Google reseller. He has earned the Google apps sales consultant certification and the Google apps deployment certification, from Google. Tom also co-produces the ACRE quarterly Real Estate Sentiment Index and report in conjunction with ACRE. He is a designated ACRE Education Instructor and serves as a member of the ACRE Board of Trustees. To learn more, please visit http://oswco.com.

Alabama Real Estate Confidence Index (ARECI) for 1st Quarter 2013 Trends Upward

The survey projects expectations for the 1st quarter of 2013. The scale ranges from 0-100 with 0 being much worse, 100 being much better, and 50 indicating no change expected.

The professional Real Estate community’s optimism improved in two important measures, sales indications improved from 52 to 55 (expansion) and price expectations improved to the 50 level (neutral) for the 1st time in the three years we have been doing the survey. Interestingly, availability of credit continues to be viewed negatively and deteriorating now at 44, down one point from last quarter.

Overall Indicators

Overall Indicators

The national score at 47, same as last quarter 49, indicates that respondents remain somewhat pessimistic about the overall economic picture. The participants remained positive on the statewide conditions at 53 same as last quarter. Inventory expectations declined to 49 from 52 indicating some increases of supply expected. Sellers are likely to be frustrated by pricing, and buyers will continue to have problems getting financing.

Regional Results:

1q2013regional

The coastal region continued to remain the most optimistic in the state. On an overall basis all areas remain above 50, indicating expansion expected.

This quarter showed little change in expectations in all regions. The results are still encouraging, with overall measures in the expansion zone, at or over 50.

Commercial market participants (the majority of the respondents are from the Birmingham market area) remained projecting a neutral market this quarter (Total Stat) at 50 this quarter and dropping 6 points to 46 (contraction) for sales expectations. Price expectations are still soft, at 46 vs. 49 last quarter indicating pricing pressure. The score for credit availability is looking weaker, at 46 down from 49 points from last quarter.

North Region

North Alabama experienced a modest deterioration in most scores.  The total score of 47, down from 49, a 2 point decline from last quarter, and slightly below prior year 1st quarter scores. The sales outlook is modestly positive at 53 but with pricing pressure expected with a score of 45.

North Central Region

The North Central Region overall score improved to 50 from 49 last quarter, The sales score improved to 54 from 51. Inventory score moved to neutral at 50 from 52 with, pricing moving to 52 from 49, and credit at 45.

South Central Region

The South Central Region participants’ outlook for sales improved from 50 to 51.

South Region

The Southern Region sales score improved the most, 6 points to 61 the highest of the region scores.  Price expectations jumped 12 points to 55.

About the Alabama Real Estate Confidence Index and Survey:

More than 400 professionals responded to the 1st quarter 2013 survey which was conducted during the month of December 2012. The survey, conducted by the Alabama Center For Real Estate now has the largest participation of any real estate survey. It provides important market insights. Full history and scores for each market segment are located here on the web http://goo.gl/5lt2G

The ACRE Leadership Council  determined the need for a statewide industry confidence index and this was adopted as the Council’s first initiative. Tom Brander, Council Member, was selected by the Council and Grayson Glaze, ACRE Executive Director, to spearhead and work with the Center to conduct and produce its Alabama Real Estate Confidence Index (ARECI). The Council appreciates everyone who participated.

For further information contact Tom Brander at Tombrander@tombrander.com or Grayson Glaze at gglaze@cba.ua.edu

Mid Year Real Estate Review, Alabama

The slides below contain material from the mid year review and comparisons with projections, for the remainder of the year.